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> When you expand it to institutions, real-time settlement means having to warehouse all the funds they might need to trade with in a day with their prime broke
by wcoenen 6y ago
> When you expand it to institutions, real-time settlement means having to warehouse all the funds they might need to trade with in a day with their prime brokers as cash. Not Treasuries. Cash.
You are seeing this change in terms of the existing system ("100% collateral parked at intermediaries!"). But ultimately it might be possible to get rid of (some of) the intermediaries altogether, and move to direct atomic exchange of bearer instruments.
The Ethereum "defi" phenomenon is showing us a glimpse of what's possible. It would require an upgrade of the dollar to a CBDC though, or perhaps just wider use of stablecoins such as USDC.